WEBVTT - Earnings, Central Banks, Gary Gensler, and Meta (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day, we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.960 --> 0:00:23.200 I want to talk some cars, Matt, some German cars. 0:00:23.360 --> 0:00:26.520 I would love to, you know, not just German cars. 0:00:26.560 --> 0:00:31.840 You're referring to the full shory story. They're made everywhere, right, 0:00:31.920 --> 0:00:34.400 and China is I think the real problem here. 0:00:34.520 --> 0:00:38.960 All right, let's go to Monica raymut Auto's industry disruption report. 0:00:39.000 --> 0:00:41.839 I didn't know we had a disruption reporter from Bloomberg 0:00:41.880 --> 0:00:45.000 News joins us here. So Monica, let's start with Volkswagen. 0:00:45.080 --> 0:00:47.960 What's the news coming out of our good friends from Germany? 0:00:49.640 --> 0:00:53.080 Thanks for having me, guys. I mean, the biggest news 0:00:53.600 --> 0:00:55.400 of the week, I would have to say is the 0:00:55.440 --> 0:01:00.280 deal with XPANG. Basically, Volkswagen came out yesterday and said 0:01:00.320 --> 0:01:03.320 that they're investing around seven hundred million dollars in this 0:01:03.960 --> 0:01:08.360 EV producer in China, and it's really at first for Volkswagen, 0:01:08.360 --> 0:01:11.119 it's basically sort of them admitting, you know, we can't 0:01:11.600 --> 0:01:13.840 we can't really keep up on the Chinese market, so 0:01:13.880 --> 0:01:16.240 we need to partner with with somebody who really has 0:01:16.280 --> 0:01:18.920 their finger on the pulse of what Chinese consumers want. 0:01:19.120 --> 0:01:23.200 It's amazing because I mean Volkswagen is usually the biggest 0:01:23.319 --> 0:01:25.520 or the second biggest car maker in the world. Right, 0:01:26.040 --> 0:01:30.720 how key is the Chinese market Monica to Volkswagen and 0:01:31.200 --> 0:01:33.320 is it that important to other manufacturers? 0:01:34.680 --> 0:01:34.880 Oh? 0:01:34.959 --> 0:01:37.480 Yeah, I mean, I mean China is absolutely huge. I 0:01:37.520 --> 0:01:41.640 mean it's it's basically like thirty percent of their revenues 0:01:42.080 --> 0:01:44.440 and has and has it has been. It has played 0:01:44.480 --> 0:01:46.399 a key role for them over the past several decades. 0:01:46.640 --> 0:01:49.680 And I mean Volkswagen was really a star there, the 0:01:49.720 --> 0:01:52.280 market leader for the past decades because they were banking 0:01:52.320 --> 0:01:57.200 on that German reputation of engineering ability and you know 0:01:57.240 --> 0:02:01.280 that Cachet as a as a foreign autumn. But now 0:02:01.400 --> 0:02:04.520 as the tide has turned and everyone's pivoting towards electric vehicles, 0:02:04.920 --> 0:02:09.040 you know, the local automakers, the local startups in China 0:02:09.080 --> 0:02:11.200 are able to leverage what they're able to do when 0:02:11.240 --> 0:02:15.000 it comes to software and technology and the consumers are 0:02:15.120 --> 0:02:18.240 are pivoting that way, and Volkswagen has been really slow 0:02:18.320 --> 0:02:22.440 to sort of pivot in that direction. And they've they've 0:02:22.480 --> 0:02:24.720 really struggled on software, you know, trying to. 0:02:25.040 --> 0:02:27.800 Now, Herbert Deese was chased out as CEO, but he 0:02:28.000 --> 0:02:32.200 was I kept seeing headlines like spending fifty billion dollars 0:02:32.240 --> 0:02:35.359 to build evs and he had I think ralvald wrote 0:02:35.400 --> 0:02:38.040 a story back in the day that Deese wanted to 0:02:38.240 --> 0:02:41.359 start a huge software company within Folkswagen and he was 0:02:41.400 --> 0:02:43.520 spending almost thirty billion dollars on that. 0:02:43.560 --> 0:02:45.040 What happened to all those efforts? 0:02:45.840 --> 0:02:48.239 Oh yeah, Oh, I mean those efforts are still underway. 0:02:48.639 --> 0:02:53.120 The software unit carried is still alive and kicking a 0:02:53.240 --> 0:02:56.480 bit barely, not barely, I shouldn't say that, But all 0:02:56.520 --> 0:02:59.280 of those efforts, they haven't all been for nought. 0:02:59.440 --> 0:02:59.640 You know. 0:03:00.400 --> 0:03:03.639 Carriod, the software unit is still creating two of the 0:03:04.200 --> 0:03:08.160 big coming platforms for Volkswagen, the two big EV platforms, 0:03:08.200 --> 0:03:10.600 one for the premium brands Portion and Audi, and then 0:03:10.639 --> 0:03:13.440 one sort of like a catch all platform that can 0:03:13.480 --> 0:03:17.240 be tailored across all of the ten brands. The problem 0:03:17.440 --> 0:03:21.359 was Carriod, the software unit just took on too many 0:03:21.400 --> 0:03:23.880 tasks at the same time, and they were overloaded and 0:03:23.919 --> 0:03:28.120 they weren't able to deliver non glitchy software, especially when 0:03:28.160 --> 0:03:31.560 it came to the ID series for Volkswagen. So basically, 0:03:31.919 --> 0:03:34.360 Luma came in and he said, okay, hold up, we 0:03:34.400 --> 0:03:36.360 need to clean house a bit, we need to refocus 0:03:36.360 --> 0:03:39.480 our energies. And he's he's put in a new CEO 0:03:39.840 --> 0:03:43.520 at Carriod. He's you know, created this five point plan 0:03:43.600 --> 0:03:46.320 of trying to get things in order. And he's also 0:03:46.600 --> 0:03:49.080 taken a play a page from the playbook of Portia 0:03:49.160 --> 0:03:52.760 and sort of saying, you know, listen, compared to my predecessor, 0:03:52.800 --> 0:03:56.800 I'm not afraid to go into third party partnerships to 0:03:56.920 --> 0:04:00.839 get the best technology here. And he's really saying, yes, 0:04:00.880 --> 0:04:03.680 we will stick with our software strategy with carry It. 0:04:03.800 --> 0:04:08.560 Yes we will continue to deliver the platforms, the EV 0:04:08.640 --> 0:04:12.600 platforms for Audi, for the for their q Q six, 0:04:12.960 --> 0:04:16.120 for the Pasha Emacon, but also moving forward, we're not 0:04:16.200 --> 0:04:18.760 going to be afraid to partner with other people who 0:04:18.800 --> 0:04:20.520 who have been doing this a little bit longer or 0:04:20.560 --> 0:04:22.520 have more expertise that we currently don't have. 0:04:23.400 --> 0:04:25.560 So Monica, just give us the kind of a sense, 0:04:25.640 --> 0:04:29.360 your sense of how the European automakers in general are 0:04:29.400 --> 0:04:32.440 are pursuing this this transition to EV. Is there a 0:04:32.440 --> 0:04:34.479 sense that they're on the cutting edge or they're lagging 0:04:34.760 --> 0:04:35.520 kind of where are they? 0:04:37.040 --> 0:04:39.279 Oh man, that's a that's a really tough question. I 0:04:39.320 --> 0:04:42.719 mean Volkswagen was sort of the first European car maker 0:04:42.800 --> 0:04:45.800 to you know, jump in feet first, uh, into the 0:04:45.839 --> 0:04:48.440 into the EV uh you know push. I mean that 0:04:48.520 --> 0:04:50.560 all came as a result of the diesel scandal and 0:04:50.600 --> 0:04:52.560 they were sort of, you know, nudged a bit in 0:04:52.600 --> 0:04:56.560 that direction, right, but they've really been you know, they 0:04:56.760 --> 0:04:59.040 sort of started out, you know, they were the first 0:04:59.080 --> 0:05:00.839 ones to move forward, and the you had Mercedes and 0:05:00.880 --> 0:05:04.000 BMW sort of moving forward on that. The difference I 0:05:04.040 --> 0:05:07.360 think there is you have Mercedes and BMW that are 0:05:07.440 --> 0:05:09.800 more in the premium and luxury market, right, and so 0:05:10.200 --> 0:05:13.400 they're able to It's the same thing with Portia. They're 0:05:13.440 --> 0:05:16.360 still able to leverage their their IC sales, their combustion 0:05:16.440 --> 0:05:20.440 engine sales as and use that to fund partially pushed 0:05:20.440 --> 0:05:21.040 into evs. 0:05:22.200 --> 0:05:23.200 Apparently, yess. 0:05:24.600 --> 0:05:30.120 Indeed, Monica are the other car makers as active in China. 0:05:30.160 --> 0:05:33.240 I remember seeing some stories about some of the Stilantis brands, 0:05:33.279 --> 0:05:36.000 you know, pulling out. Now, maybe it just wasn't a 0:05:36.040 --> 0:05:39.560 big enough market for those individual brands, but surely Tavares 0:05:39.680 --> 0:05:42.359 has to be worried if it's this important to BLOOMA. 0:05:44.040 --> 0:05:47.560 Yes, I mean some, I mean some car makers are 0:05:47.640 --> 0:05:50.240 more active in China than other Stalantis. I think has 0:05:50.560 --> 0:05:53.440 has your right, has moved away from China and is 0:05:53.920 --> 0:05:59.760 focusing his efforts elsewhere. I think the concern for Tavares 0:06:00.080 --> 0:06:02.840 more is what do the Chinese car makers mean for 0:06:02.920 --> 0:06:05.880 Europe when they come over here? Because the Chinese makers 0:06:05.920 --> 0:06:10.159 are focusing more on you know, sort of these small, smaller, 0:06:10.760 --> 0:06:13.360 smaller vehicles that are maybe more affordable, and if the 0:06:13.440 --> 0:06:16.680 European car makers can't focus on that segment, there's a 0:06:16.760 --> 0:06:21.800 real fear among some analysts and automakers that the Chinese 0:06:21.839 --> 0:06:24.520 makers could capture a segment of of the of the 0:06:24.640 --> 0:06:27.800 market that the European makers are not focusing on. And 0:06:27.880 --> 0:06:29.880 so that's why, you know, there's this drum beat, at 0:06:29.920 --> 0:06:31.960 least from Tavares that we need to make these vehicles 0:06:32.000 --> 0:06:35.280 more affordable. We need to get regulations, we need to 0:06:35.320 --> 0:06:38.080 get you know, government policies on board in Europe to 0:06:38.160 --> 0:06:42.200 make the you know, these cars more affordable in Europe. 0:06:43.520 --> 0:06:46.839 But in terms of how other carmakers are doing in China, 0:06:46.920 --> 0:06:49.760 I mean it's really Folks was at the top of 0:06:49.839 --> 0:06:51.920 the list for for a long time. But you have 0:06:52.320 --> 0:06:54.720 Uid that's, you know, really at the top now when 0:06:54.760 --> 0:06:56.800 it comes to EV sales, and then you have Tesla 0:06:57.920 --> 0:07:01.760 who can't certainly can't forgotten. And you know, those are 0:07:01.839 --> 0:07:04.320 the two big players, at least to my mind. 0:07:04.560 --> 0:07:06.400 All right, Monica, great stuff, great catching up with you, 0:07:06.480 --> 0:07:10.880 Monica Raymuland, Auto's industry disruption reporter for Bloomberg News. 0:07:10.960 --> 0:07:12.800 Joining us how to Berlin, joining us out of Berlin, 0:07:12.880 --> 0:07:14.360 right in my old office, you're old. 0:07:14.280 --> 0:07:17.120 Beat right, yeah, exactly right. Where where's your car these days? 0:07:17.160 --> 0:07:17.800 Are your challenger? 0:07:17.960 --> 0:07:19.280 Do we know where it is? 0:07:19.680 --> 0:07:24.559 Well, supposedly it's scheduled for production in uh in Canada, Okay, 0:07:24.920 --> 0:07:28.840 But they haven't sent me the actual production confirmation yet, 0:07:28.920 --> 0:07:31.400 so I'm still waiting. And in the meantime, I'm looking 0:07:31.440 --> 0:07:34.600 across like Auto Trader and maybe I'm thinking maybe I 0:07:34.600 --> 0:07:36.920 should go for bright orange instead of dark green. 0:07:37.040 --> 0:07:37.480 I'm not sure. 0:07:37.800 --> 0:07:39.640 Yeah, so you haven't selected that even that yet? 0:07:39.640 --> 0:07:39.920 All right? 0:07:40.080 --> 0:07:42.720 It's just supply chain still an issue in the auto industry. 0:07:42.800 --> 0:07:44.880 Matt's been waiting for this challenger with this scat pack 0:07:44.920 --> 0:07:46.800 all year logic for like a year. I don't know 0:07:46.840 --> 0:07:47.560 what's going on there. 0:07:49.120 --> 0:07:52.480 You're listening to the team. Can's a live program Bloomberg 0:07:52.560 --> 0:07:55.760 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:07:56.000 --> 0:07:59.200 the iHeartRadio app and the Bloomberg Business app, or listening 0:07:59.240 --> 0:08:01.240 on demand where however you get your podcast. 0:08:02.960 --> 0:08:05.679 Matt Miller, Paul Sweeney here in our Bloomberg Interactive Brokers studio, 0:08:05.720 --> 0:08:09.520 and I forgot to mention we are simulcasting on YouTube 0:08:09.640 --> 0:08:11.960 so people see me, so people can see the MAT's 0:08:12.080 --> 0:08:15.480 actually here. He's back after a little hiatus in the afternoon. 0:08:15.560 --> 0:08:17.760 So you can check us out on YouTube, just search 0:08:17.920 --> 0:08:21.080 Bloomberg Global News. All right, this has been in addition 0:08:21.160 --> 0:08:23.680 to just a week of I think one hundred and 0:08:23.720 --> 0:08:25.840 sixty five of the S and P five hundred companies 0:08:25.840 --> 0:08:27.600 reporting earnings next week, and I think one hundred and 0:08:27.600 --> 0:08:30.400 seventy two next week, So super busy in the earning season. 0:08:30.520 --> 0:08:32.720 But we've had a lot of central bank movement over 0:08:32.760 --> 0:08:35.520 the past couple of days, including the Fed yesterday and 0:08:35.600 --> 0:08:38.240 the European Central Bank today. So let's kind of break 0:08:38.280 --> 0:08:41.120 it all down and see where we are. Anika Gupta 0:08:41.240 --> 0:08:45.040 joins us. She is the director of Macroeconomic Research, Equities 0:08:45.040 --> 0:08:50.400 and Commodities for Wisdom treat She joins us via zoom. So, Anika, boy, 0:08:51.120 --> 0:08:52.439 what do you make of kind of what we've seen 0:08:52.520 --> 0:08:54.280 coming out of these central banks over the past twenty 0:08:54.320 --> 0:08:54.760 four hours. 0:08:56.320 --> 0:08:59.640 Yeah, it's been really interesting, Paul. You know, at one 0:08:59.720 --> 0:09:03.240 hund we have both of these central banks, the FED 0:09:03.679 --> 0:09:06.520 as well as the ECB. Uh, you know, keeping their 0:09:06.559 --> 0:09:12.040 optionality open. I think they they they've they've tried to, 0:09:12.840 --> 0:09:16.480 you know, indicate that they have they have covered quite 0:09:16.480 --> 0:09:19.920 a bit of ground on the inflation front. The only 0:09:20.000 --> 0:09:22.640 difference between the FED and the ECB is the FED 0:09:23.360 --> 0:09:25.480 is facing an economy which is a lot more resilient 0:09:25.640 --> 0:09:29.959 and stronger based on the consumer strength, whereas in the 0:09:30.040 --> 0:09:33.679 Eurozone the ECB is faced with the situation where they 0:09:33.760 --> 0:09:37.160 have made a lot of progress on inflation. Yet uh, 0:09:37.360 --> 0:09:41.439 you know, the recent indicators are pointing to growth slowing down, 0:09:41.520 --> 0:09:44.319 so we are headed for a period of stagnation before 0:09:44.360 --> 0:09:47.439 we actually get that rebound back into a growth phase. 0:09:48.320 --> 0:09:51.280 So I think the ECB gave out a lot today 0:09:51.520 --> 0:09:53.880 at the at the at the meeting where you know, 0:09:54.000 --> 0:09:56.000 some of the some of the statements that were made 0:09:56.480 --> 0:10:00.280 when when President la guard was asked, is there still 0:10:00.360 --> 0:10:02.640 more ground to cover? And you know, she clearly said 0:10:03.120 --> 0:10:05.760 at this point she wouldn't say so. And I think 0:10:05.800 --> 0:10:10.240 that that indicates this looks likely to be the last hike. 0:10:10.679 --> 0:10:13.920 But clearly they've kept that optionality open where you know, 0:10:14.080 --> 0:10:18.959 there's so much additional data to come out until the 0:10:19.000 --> 0:10:22.640 September meeting that they you know, anything could influence their decision. 0:10:23.240 --> 0:10:26.000 But as of now, I would say for both central banks, 0:10:26.080 --> 0:10:28.200 it looks like this is the last one in their 0:10:28.280 --> 0:10:29.360 tightening cycle. 0:10:29.640 --> 0:10:33.520 Well, you know, Chair and Powell referenced the data points 0:10:33.559 --> 0:10:36.680 that he was looking forward to between now and September meeting. 0:10:36.720 --> 0:10:37.280 There are many. 0:10:38.240 --> 0:10:41.640 We got some this morning though, that were pretty darn impressive. 0:10:41.800 --> 0:10:44.599 GDP came out at two point four percent for the 0:10:44.640 --> 0:10:47.440 second quarter. We were looking for one point eight percent 0:10:47.559 --> 0:10:51.680 in our survey of economists. Personal consumption consumer spending also 0:10:51.800 --> 0:10:55.120 higher than anticipated one point six percent, And you got 0:10:56.000 --> 0:10:59.319 the core PCE, which is the Fed's preferred gauge of 0:10:59.360 --> 0:11:02.560 inflation and not nearly as bad as we expected at 0:11:02.600 --> 0:11:06.160 three point eight percent rather than four percent. So this 0:11:06.440 --> 0:11:09.880 looks pretty darn goldilocks to me. How do you think 0:11:09.920 --> 0:11:11.120 it looks to Chair Powell? 0:11:13.000 --> 0:11:16.240 Well, you're absolutely right, Matt. You know, I think we've 0:11:16.280 --> 0:11:21.720 even seen the IMF echo similar a similar viewpoint where 0:11:21.800 --> 0:11:24.640 the US has been and is proving to be a 0:11:24.679 --> 0:11:27.839 lot more resilient than investors expected at the at the 0:11:27.920 --> 0:11:31.640 start of the year. And I think, you know, given 0:11:31.800 --> 0:11:34.559 given the fact that the US economy has been that brasilient, 0:11:34.640 --> 0:11:37.600 it does open a goldilocks environment because we have seen 0:11:37.800 --> 0:11:42.079 progress made on inflation, and given the fact that the 0:11:42.480 --> 0:11:45.760 growth has been quite resilient, it should put this fit 0:11:45.840 --> 0:11:49.880 in a situation where they could hold rates at current levels, 0:11:50.559 --> 0:11:54.040 and then that expectation of them, you know, beginning to 0:11:54.160 --> 0:11:56.600 cut just gets postponed further down the line. 0:11:58.360 --> 0:12:00.559 So Anka, you're based in life. And then I believe 0:12:00.640 --> 0:12:03.440 right around one King William Street, which is just right 0:12:03.520 --> 0:12:07.160 around the corner from Bloomberg's European headquarters at Queen Victoria Street, 0:12:07.240 --> 0:12:10.680 talk to us about inflation, inflation in the UK, inflation 0:12:10.840 --> 0:12:14.520 in across Europe. Christine Leguard called that out as still 0:12:14.640 --> 0:12:17.400 higher than she would like to say. Why is inflation 0:12:18.200 --> 0:12:20.079 across Europe maybe a little bit stickier than maybe what 0:12:20.080 --> 0:12:21.000 we're seeing here in the US. 0:12:22.760 --> 0:12:24.680 So I think what seems to. 0:12:24.679 --> 0:12:29.400 Be quite different in the UK is largely due to 0:12:29.480 --> 0:12:32.640 more structural factors. I think Brexit in a big way 0:12:32.920 --> 0:12:38.680 has contributed to inflation being a lot stickier. That being said, 0:12:38.840 --> 0:12:42.079 the most recent inflation report has shown you know, a 0:12:42.320 --> 0:12:46.920 small sliver of cooling. But I think Gregsity has a 0:12:47.000 --> 0:12:49.120 very important role to play as to why the UK 0:12:49.240 --> 0:12:52.640 seems to be the laggard in actually bringing down that 0:12:52.760 --> 0:12:56.480 inflation side. But for the EU Zone, you know, what 0:12:56.640 --> 0:13:00.559 seems to be holding inflation up quite strong has been 0:13:00.600 --> 0:13:03.640 the strength in the labor of MAK. Wages have been rising, 0:13:04.800 --> 0:13:08.120 and I think that that has essentially, from an income standpoint, 0:13:08.559 --> 0:13:13.040 helped your your your zone consumer you know, actually have 0:13:13.240 --> 0:13:15.480 a better and a higher purchasing power. So you've got 0:13:15.520 --> 0:13:19.839 wages rising, You've got inflation beginning to come down, be 0:13:19.920 --> 0:13:23.920 it headline inflation feeding into lower core inflation, and that 0:13:24.080 --> 0:13:26.480 is just you know, from an income standpoint, making the 0:13:26.559 --> 0:13:30.320 uarsone consumer a lot, putting them in a much better position. 0:13:30.880 --> 0:13:32.880 So I think those two factors really stand out, and 0:13:33.000 --> 0:13:35.679 that's that's one of the reasons why our fight inflation 0:13:35.800 --> 0:13:38.360 has been a bit of a laggart compared to the US. 0:13:39.800 --> 0:13:42.040 So you were talking about how rate hikes are going 0:13:42.120 --> 0:13:44.440 to get pushed back, but I noticed on the dot 0:13:44.520 --> 0:13:48.319 plot that we're expecting, at least the FED itself is 0:13:48.440 --> 0:13:53.959 forecasting a full percentage point of rate cuts over the 0:13:54.080 --> 0:13:59.280 next year. Why do you think that the Fed's forecast 0:13:59.440 --> 0:14:02.520 differ so much from what Jerome Powell, you know, we'll 0:14:02.600 --> 0:14:04.320 say at any given press conference. 0:14:05.920 --> 0:14:08.280 Well, I think it's it's, you know, purely based on 0:14:08.320 --> 0:14:11.760 the fact that the economy has been fairly resilient. There 0:14:11.800 --> 0:14:15.280 are also risks lurking around. You know, we've seen commodity 0:14:15.360 --> 0:14:19.720 prices over the past few weeks actually rebound. We've seen uh, 0:14:19.880 --> 0:14:25.960 you know, the escalation between Russia and Ukraine actually increase, uh, 0:14:26.680 --> 0:14:28.880 you know, with Russia pulling out of the Black Sea 0:14:28.960 --> 0:14:32.560 grain deal, and so as a consequence, we've seen agricultural 0:14:32.600 --> 0:14:36.120 prices within the commodity spectrum also rise. U and I 0:14:36.160 --> 0:14:38.960 think central bankers have taken note of that that these 0:14:39.320 --> 0:14:42.280 these risks are there at the horizon and for the US, 0:14:42.320 --> 0:14:45.640 it's quite important because you know, the we're seeing growth 0:14:45.720 --> 0:14:49.080 quite resilient. For the Eurozone, we are seeing growth being 0:14:49.200 --> 0:14:52.240 quite tepid. You know, forward looking indicators are saying there's 0:14:52.280 --> 0:14:56.160 weakness ahead. So I think the ECB is right to 0:14:56.240 --> 0:14:59.840 say that they you know, they they they've covered quite 0:14:59.840 --> 0:15:02.200 a bit of ground. There isn't all that more left 0:15:02.240 --> 0:15:04.360 to do so at this point in time. But for 0:15:04.440 --> 0:15:06.960 the US, you know, as as growth seems to be 0:15:07.000 --> 0:15:11.240 a lot stronger and the consumers appears to be a 0:15:11.280 --> 0:15:15.440 lot more resilient, and you're also seeing a few inflationary 0:15:16.000 --> 0:15:19.160 concerns rising on the horizon, there's always the risk that 0:15:19.600 --> 0:15:22.400 you know, they've go on me just does better than expected, 0:15:22.480 --> 0:15:25.720 and that gives less need for power to actually have 0:15:25.800 --> 0:15:27.480 to invene intervene. 0:15:27.040 --> 0:15:31.000 With k What does that mean for the FX picture? 0:15:31.200 --> 0:15:34.840 I mean, we had seen the dollar hold strong for 0:15:35.000 --> 0:15:38.600 so long this year against all you know, predictions, and 0:15:38.640 --> 0:15:41.160 then it came kind of the Bloomberg Dollar Index came 0:15:41.520 --> 0:15:44.200 tumbling down a couple of weeks ago. Now it's on 0:15:44.320 --> 0:15:47.120 a steady climb higher. You know, in the euros trading 0:15:47.160 --> 0:15:49.320 it less than a dollar ten right. The pound is 0:15:49.400 --> 0:15:51.520 trading it less than a dollar thirty. What do you 0:15:51.600 --> 0:15:54.680 think the growth differential means for the currencies? 0:15:55.760 --> 0:15:58.120 It has, It has a very big impact. So what 0:15:58.240 --> 0:16:02.880 we've seen is the dollar response to two important factors, 0:16:03.040 --> 0:16:05.720 one being the growth of differential and the second being 0:16:06.080 --> 0:16:11.080 relative interest Now. Clearly, until now, the dollar was weakening 0:16:11.240 --> 0:16:13.880 because interest rates and the rest of the developed market 0:16:13.920 --> 0:16:18.880 world was actually rising and interest rates expectations for the 0:16:19.000 --> 0:16:21.920 FED were actually declining, so there were expectations for them 0:16:21.960 --> 0:16:26.240 to pause or cut. But the way things are evolving 0:16:26.480 --> 0:16:29.560 with the strength of the US economy, you know, we're 0:16:29.600 --> 0:16:33.080 now seeing relative interest rates move in favor of can 0:16:33.120 --> 0:16:36.800 continue to remove in favor of developed developed market economies 0:16:36.800 --> 0:16:39.920 as opposed to the US. And at the same time, 0:16:40.800 --> 0:16:45.520 we're also seeing growth prospects in UK and Eurozone actually 0:16:45.560 --> 0:16:49.080 deteriorate compared to the US, and hence that seems to 0:16:49.160 --> 0:16:51.920 be the dominant factor in play right now, which is 0:16:51.960 --> 0:16:53.360 why the dollar has been strengthening. 0:16:54.040 --> 0:16:55.760 All right, Anitka, thank you so much for joining us. 0:16:55.800 --> 0:16:59.280 Really appreciate getting your perspective. Anika Gutta. She is the 0:16:59.320 --> 0:17:02.800 director of me Acroeconomic Research for the Equities and Commodities 0:17:02.880 --> 0:17:06.000 Business at Wisdom Treaty is based in London. Again, we 0:17:06.080 --> 0:17:10.440 had the ECB this morning, fed yesterday. Rate increases. Yes, 0:17:10.960 --> 0:17:13.440 the market's kind of reading into it that they may 0:17:13.560 --> 0:17:16.760 be perhaps the last of the rate increases, at least 0:17:16.960 --> 0:17:19.280 for now, when we're seeing some reaction in the market's 0:17:19.359 --> 0:17:21.320 s and P five hundred up a half one percent. 0:17:21.680 --> 0:17:24.720 You're listening to the tape cans our live program, Bloomberg 0:17:24.840 --> 0:17:28.399 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:17:28.480 --> 0:17:31.680 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:17:31.760 --> 0:17:34.520 You can also listen live on Amazon Alexa from our 0:17:34.600 --> 0:17:38.960 flagship New York station, Just say Alexa Play Bloomberg eleven thirty. 0:17:40.040 --> 0:17:42.840 I'd like to begin with your newest rules that you 0:17:43.000 --> 0:17:46.680 just unveiled yesterday, putting restrictions on brokerages and money managers 0:17:47.040 --> 0:17:49.440 and their use of AI to interact with clients. What 0:17:49.600 --> 0:17:53.119 is your primary concern with the adoption of this technology 0:17:53.200 --> 0:17:54.159 that you're trying to address? 0:17:54.400 --> 0:17:57.200 First, Kaylee, it's good to be with you, But talking 0:17:57.240 --> 0:18:02.920 about this, I think that predict data analytics, including artificial intelligence, 0:18:03.680 --> 0:18:06.760 is the transformative technology of our times, and every bit 0:18:06.840 --> 0:18:09.879 is transformatives to the Internet or mass production of the 0:18:09.920 --> 0:18:11.360 automobile one hundred years ago. 0:18:11.720 --> 0:18:13.400 Now, what are we trying to address? 0:18:14.160 --> 0:18:19.119 When an investment advisor or a broker works with you 0:18:19.200 --> 0:18:23.240 as an investor, they're not supposed to put their interest, 0:18:23.480 --> 0:18:26.880 the advisor's interest ahead of yours, Kayley, as an investor. 0:18:27.640 --> 0:18:30.000 And so what we're trying to do is make sure 0:18:30.040 --> 0:18:35.040 that the technology aligns with that standard, that the technology 0:18:35.320 --> 0:18:38.199 that can predict about each and every one of us 0:18:38.359 --> 0:18:42.040 so much about how we might react to a little 0:18:42.119 --> 0:18:46.159 behavioral prompt or a little knowledge how we might react. 0:18:46.720 --> 0:18:50.600 That they're putting our interest as an investor in the 0:18:50.720 --> 0:18:53.480 right place and not putting themselves ahead of it. 0:18:54.119 --> 0:18:55.800 And of course the AI move wasn't the only one 0:18:55.840 --> 0:18:59.040 you made yesterday. You also just approved a plan to 0:18:59.119 --> 0:19:03.000 require companies to disclose cyber breaches within a four business 0:19:03.160 --> 0:19:04.000 day timeline. 0:19:04.119 --> 0:19:06.160 Why is that the appropriate time break? 0:19:06.359 --> 0:19:09.120 Well, if I could just give a little bit more, 0:19:09.280 --> 0:19:11.560 it's about material. 0:19:12.800 --> 0:19:13.320 Incidents. 0:19:13.920 --> 0:19:17.600 So if a company lost a factory and that factory 0:19:17.640 --> 0:19:22.240 is wiped out, and that factory is material to its operations, 0:19:22.520 --> 0:19:27.200 let's say because it's lost to a hurricane. Investors need 0:19:27.320 --> 0:19:29.760 to know when they're buying and selling the stock. In 0:19:29.880 --> 0:19:32.960 a similar way, if you had a cyber incident that 0:19:33.119 --> 0:19:36.680 management determines as material you know, hundreds of millions of 0:19:36.720 --> 0:19:39.040 files lost or something or compromised. 0:19:39.920 --> 0:19:42.840 Investors benefit from that disclosure. 0:19:43.160 --> 0:19:46.040 But giving business is just four days to disclose that. 0:19:46.320 --> 0:19:52.680 That's what we have in our rules today currently four 0:19:52.800 --> 0:19:57.399 business days if you have, like if that factory you know, 0:19:57.680 --> 0:20:01.560 was wiped out by a hurricane, to put out the 0:20:01.720 --> 0:20:03.160 material information. 0:20:04.160 --> 0:20:06.960 And so that's consistent with rules on the books. 0:20:07.200 --> 0:20:11.000 And by the way, many companies have been making such disclosures, 0:20:11.080 --> 0:20:14.720 some haven't. It's been fragmented and we thought it was 0:20:14.800 --> 0:20:20.640 important to bring some consistency to it around these material events. 0:20:23.040 --> 0:20:25.440 Mister chaired, Danny Berger here in London, really wonderful to 0:20:25.480 --> 0:20:28.480 speak with you today now on some of your proposals 0:20:28.520 --> 0:20:32.440 when it comes to equity market structural reforms. You joined 0:20:32.440 --> 0:20:35.720 Bloomberg TV back in March. You said, of market participants, 0:20:36.240 --> 0:20:38.960 give us your best advice, tell us what you think. 0:20:39.600 --> 0:20:40.159 What did you get. 0:20:40.200 --> 0:20:41.560 What was the best advice you got? 0:20:43.600 --> 0:20:49.240 Well, we got in terms of equity market structure, thousands 0:20:49.600 --> 0:20:53.639 of comments. So I would say that what we're about 0:20:53.680 --> 0:20:57.159 at the SEC is trying to drive greater efficiency and 0:20:57.280 --> 0:21:01.080 competition in those markets, so when you send an order 0:21:01.640 --> 0:21:05.600 into a broker, that you feel that you're getting best 0:21:06.160 --> 0:21:12.000 execution in that order, and also that the markets themselves 0:21:12.080 --> 0:21:16.120 are competitive. So one of our rules was about sort 0:21:16.119 --> 0:21:21.080 of leveling the playing field between the lit markets, the 0:21:21.160 --> 0:21:24.520 so called New York Stock Exchange and NASDAK and so forth, 0:21:25.000 --> 0:21:29.119 and the wholesalers are dark market, which at times the 0:21:29.240 --> 0:21:32.119 dark part of the markets are between a third and 0:21:32.200 --> 0:21:34.320 a half of the market. So it's trying to bring 0:21:34.480 --> 0:21:39.600 some level the playing field and ensure that investors are 0:21:39.600 --> 0:21:41.760 getting best execution in these markets. 0:21:42.800 --> 0:21:45.719 What about in terms of the feedback you got, are 0:21:45.800 --> 0:21:47.920 you taking any of that on board? Would you change 0:21:47.960 --> 0:21:49.959 anything considering what you've heard so far? 0:21:51.480 --> 0:21:54.840 Well, we do that as a regular basis. 0:21:54.920 --> 0:21:56.879 When we make a proposal, we put it out to 0:21:56.920 --> 0:22:00.320 public comment and get feedback. And we put out four 0:22:00.600 --> 0:22:06.240 separate proposals for different aspects in the markets, and I 0:22:06.320 --> 0:22:09.800 think we've gotten four to six thousand comments on each 0:22:09.880 --> 0:22:15.680 of them. So and we naturally consider it and the 0:22:15.760 --> 0:22:17.960 staff makes recommendations about adjustments. 0:22:18.760 --> 0:22:21.879 Okay, I'd like to discuss another proposed rulemaking that has 0:22:21.920 --> 0:22:24.800 received a certain degree of feedback your climate risk disclosures, 0:22:24.880 --> 0:22:29.200 specifically as it relates to Scope three emissions. What conversations 0:22:29.240 --> 0:22:31.560 are you having around Scope three in particular. 0:22:32.000 --> 0:22:34.840 Well, we've heard a lot from the public on this, 0:22:35.000 --> 0:22:39.399 but to set the stage, companies today are making disclosures 0:22:39.440 --> 0:22:42.280 around climate risk. In fact, well over half of the 0:22:42.400 --> 0:22:47.240 top thousand or so companies currently make climate risk disclosures, 0:22:47.359 --> 0:22:52.640 including greenhouse gas emission disclosure. So we're trying to bring 0:22:52.800 --> 0:22:56.239 consistency to that and yes for investors that they can 0:22:56.359 --> 0:23:00.720 compare comparability for that. You asked about one part of 0:23:00.880 --> 0:23:04.320 greenhouse gas missions, so called Scope three, which is about 0:23:04.359 --> 0:23:07.520 the supply chain and where a lot of the concern lines, 0:23:07.720 --> 0:23:12.720 and so we've heard from a lot of commenters about that, 0:23:12.920 --> 0:23:15.320 both from issuers and investors. 0:23:16.240 --> 0:23:18.680 We understood when we made a proposal. 0:23:18.240 --> 0:23:22.680 That this was not as well developed so called disclosures 0:23:22.760 --> 0:23:27.959 around supply chain emissions, and so we're taking that into consideration. 0:23:28.520 --> 0:23:32.159 And as I just chatted with your colleague, the staff 0:23:32.520 --> 0:23:39.000 considers what to recommend upon adoption and whether to make adjustments. 0:23:38.520 --> 0:23:40.280 So we could see you change there potentially. 0:23:40.440 --> 0:23:42.920 Well, just as in the equity markets that I talked about, 0:23:43.040 --> 0:23:48.000 we do take these comments seriously, Kayley. It's a really 0:23:48.720 --> 0:23:53.240 rigorous exercise in climate. We got sixteen thousand comments. 0:23:52.840 --> 0:23:55.040 So it's a lot to sort of sort through. But 0:23:55.160 --> 0:24:00.520 the Scope three issue is one that we've heard significant comments. 0:24:00.840 --> 0:24:04.000 Interestingly, we've heard from I think forty eight or forty 0:24:04.119 --> 0:24:05.760 nine of the state farm. 0:24:06.080 --> 0:24:11.119 Bureaus literally about well, what is this effect? And we 0:24:11.280 --> 0:24:12.639 only oversee. 0:24:13.800 --> 0:24:17.960 The public companies, the six or seven thousand public companies. 0:24:18.440 --> 0:24:18.800 That's it. 0:24:19.880 --> 0:24:24.080 We are a disclosure based agency. I often say we're 0:24:24.160 --> 0:24:24.959 merit neutral. 0:24:25.040 --> 0:24:26.680 We are not. You know, we're not. 0:24:28.000 --> 0:24:33.000 This disclosure is about something already happening between investors and issuers, 0:24:34.000 --> 0:24:38.119 and it's an important thing to bring consistency. It's not 0:24:38.280 --> 0:24:42.880 about those, you know, those farmers and ranchers who thoughtfully 0:24:42.960 --> 0:24:43.359 wrote us. 0:24:44.000 --> 0:24:44.600 So we've heard. 0:24:45.119 --> 0:24:47.320 Okay, I'd like to move to a different topic which 0:24:47.600 --> 0:24:51.119 has gotten a lot of attention lately, Crypto, specifically a 0:24:51.240 --> 0:24:53.200 ruling that was made in the Ripple case that XRP 0:24:54.080 --> 0:24:57.320 is only a security when sold to institutional investors, not 0:24:57.520 --> 0:25:01.280 so with retail investors. I know you've previously said you 0:25:01.359 --> 0:25:04.080 were disappointed by that ruling. The SEC has also said 0:25:04.520 --> 0:25:07.520 that it intends to seek further review. So does that 0:25:07.640 --> 0:25:09.840 mean you are going to appeal it? Can you elaborate 0:25:09.920 --> 0:25:11.600 on your thoughts around that ruling. 0:25:11.880 --> 0:25:17.080 Kayleie, great question, But the Commission, I'm one of five commissioners. 0:25:17.440 --> 0:25:21.399 The Commission has not acted on that, and. 0:25:22.920 --> 0:25:28.560 If the staff makes a recommendation, we'll have a discussion 0:25:28.640 --> 0:25:29.800 of it and we'll take it up then. 0:25:29.880 --> 0:25:31.439 But I don't really have anything more on. 0:25:31.560 --> 0:25:32.639 You for a you for that. 0:25:33.800 --> 0:25:36.920 In the meantime, as we wait for this, what does 0:25:36.960 --> 0:25:40.400 it mean for your efforts around crypto, for your efforts 0:25:40.600 --> 0:25:43.000 to try to protect the consumer in these areas? 0:25:43.040 --> 0:25:44.080 Does it complicate it? 0:25:46.240 --> 0:25:55.000 Look this field of crypto investing, a lot of investors 0:25:56.240 --> 0:26:01.080 should be aware it's not only a highly speculative asset class, 0:26:01.760 --> 0:26:06.879 it's also one that they currently should not assume that 0:26:07.000 --> 0:26:11.280 they're getting the protections of the securities laws, even though 0:26:11.359 --> 0:26:14.800 the securities laws apply to many of those tokens without 0:26:14.840 --> 0:26:20.399 prejudging anyone, but you as investors are not getting the. 0:26:20.520 --> 0:26:23.080 Full, fair and truthful disclosure. 0:26:23.840 --> 0:26:27.800 And the platforms the intermediaries are doing things that we 0:26:27.880 --> 0:26:32.159 would never in a day allow or think the New 0:26:32.240 --> 0:26:36.960 York Stock Exchange or NASDAQ would do. The platforms often 0:26:37.440 --> 0:26:40.720 are co mingling and trading against you and have market 0:26:40.800 --> 0:26:44.880 makers that are on the other side of your trades, 0:26:45.119 --> 0:26:47.479 and we don't allow that in the rest of our 0:26:47.520 --> 0:26:52.920 securities markets and the securities laws are there to protect you. 0:26:53.680 --> 0:26:55.040 And that's right now. 0:26:56.240 --> 0:26:59.840 This is a field rife with fraud, rife with huckster 0:27:01.440 --> 0:27:03.919 and they're good faith actors as well, but there are 0:27:04.280 --> 0:27:05.680 far too many that aren't. 0:27:06.520 --> 0:27:10.280 And of course you've brought cases against crypto exchanges on 0:27:10.440 --> 0:27:13.520 this point, But do you need to change tactic? Does 0:27:13.600 --> 0:27:17.040 it change anything for those cases? Again this XRP ruling. 0:27:18.520 --> 0:27:22.520 Again, I'm not going to go into any one ruling, 0:27:23.200 --> 0:27:26.000 but I think that the securities laws are clear and 0:27:26.119 --> 0:27:31.440 if you're if the public is investing in your project 0:27:31.560 --> 0:27:37.400 because they're anticipating profits based upon the efforts of that project, 0:27:37.480 --> 0:27:42.520 or there's entrepreneurs congress painted with a broad brush, and 0:27:43.880 --> 0:27:45.920 I would ask you this, It's like, when you look 0:27:45.960 --> 0:27:48.439 at a token, you can find a website, you can 0:27:48.520 --> 0:27:52.120 find a CEO, you can find a Twitter or x feed, 0:27:52.320 --> 0:27:57.879 whatever it's called these days. And there are entrepreneurs behind 0:27:58.040 --> 0:28:01.399 many of these projects. Without again prejudging any one of 0:28:01.440 --> 0:28:02.919 them Elsewhere in. 0:28:02.960 --> 0:28:05.360 The crypto space. I'd like to discuss the spot ETF 0:28:05.520 --> 0:28:09.000 because we have seen a wave of filings recently recently 0:28:09.040 --> 0:28:12.199 from Blackrock and others trying to finally achieve this one 0:28:12.240 --> 0:28:15.000 has never been approved in the US, just a futures ETF. 0:28:15.680 --> 0:28:18.400 It seems like everyone thinks there has been a tone shift, 0:28:18.440 --> 0:28:21.119 that something is different this time around. What do you 0:28:21.280 --> 0:28:23.760 make of that wave of recent filings. Has anything actually 0:28:23.880 --> 0:28:25.080 changed for the sec. 0:28:25.200 --> 0:28:27.000 Kayleye, Probably won't surprise you. 0:28:27.440 --> 0:28:30.400 Those filings do ultimately come up to a five member commission, 0:28:30.480 --> 0:28:34.920 so I can't prejudge any filing. But back to your colleague, 0:28:34.920 --> 0:28:40.000 as I said, this is a field that there's a 0:28:40.120 --> 0:28:46.800 lot of non compliance in this field, and that the 0:28:46.960 --> 0:28:51.840 platforms themselves where trading is occurring of various crypto tokens. 0:28:54.840 --> 0:28:58.200 Though some of it comes under the securities laws, currently 0:28:59.640 --> 0:29:03.680 they're not necessarily compliant with those time test of protections 0:29:03.680 --> 0:29:05.000 against fraud and manipulation. 0:29:05.600 --> 0:29:08.160 Okay, on the subject of securities laws, which obviously is 0:29:08.280 --> 0:29:12.200 your purview at the SEC. Just yesterday House Financial Services 0:29:12.240 --> 0:29:15.720 Committee passed through committee legislation on crypto market structure that 0:29:15.760 --> 0:29:18.760 would actually give more authority in regulating this space. To 0:29:18.920 --> 0:29:21.280 the CFTC still has a long way to go if 0:29:21.320 --> 0:29:22.120 it were to become law. 0:29:22.160 --> 0:29:24.000 But what is your thought on that legislation. 0:29:25.360 --> 0:29:29.160 I sort of share my thoughts directly with members on 0:29:29.240 --> 0:29:30.120 the way I told them. 0:29:30.440 --> 0:29:33.560 I understand your question, Kayley, but I think that those 0:29:33.640 --> 0:29:35.760 members on the hill would appreciate if I continue to 0:29:35.800 --> 0:29:37.240 share my thoughts directly with them. 0:29:39.400 --> 0:29:42.680 Not too dissimilar, mister Tara, I wonder if there's some 0:29:42.920 --> 0:29:46.480 degree that you would want a wider scope when it 0:29:46.600 --> 0:29:49.360 comes handing down fines to batter actors. Do you think 0:29:49.400 --> 0:29:51.920 it would be helpful to have higher finds again in 0:29:52.040 --> 0:29:54.320 order to discourage certain behaviors. 0:29:56.480 --> 0:29:59.080 I would say this, we have good tools at the 0:29:59.240 --> 0:30:04.680 SEC around not just penalties, but also what's called discoragement, 0:30:05.520 --> 0:30:09.360 to give back ill gotten gains and so forth. But 0:30:09.720 --> 0:30:15.000 if you're asking whether we could use more authorities, I 0:30:15.080 --> 0:30:18.200 would say, we need more cops on the beat, We 0:30:18.320 --> 0:30:21.720 need more resources. Our agency is just the size we 0:30:21.840 --> 0:30:25.800 were in twenty sixteen. We actually shrank, We've kind of 0:30:25.840 --> 0:30:29.720 come back, and yet the markets have grown so significantly 0:30:30.240 --> 0:30:31.240 in those seven years. 0:30:32.280 --> 0:30:34.280 And finally, as you say you need more resources, I 0:30:34.360 --> 0:30:36.840 wonder how you feel about the ability of you to 0:30:36.920 --> 0:30:39.200 get those things from this Congress, in particular, when you 0:30:39.320 --> 0:30:41.480 have certain members of Congress who have said things like 0:30:41.600 --> 0:30:47.040 introducing legislation to remove you as chair, referring to tyrannical chairmen, 0:30:47.200 --> 0:30:49.880 including the current one, Does it mean it more difficult 0:30:50.240 --> 0:30:52.200 to do your job when there's that kind of political 0:30:52.600 --> 0:30:55.400 rhetoric out there in your efforts to protect investors. 0:30:56.720 --> 0:31:01.600 We work closely with Congress and individual members, and I 0:31:01.720 --> 0:31:05.200 look forward to those public debates. I think that we're 0:31:05.280 --> 0:31:10.600 really an important agency. The capital markets really wouldn't work 0:31:10.680 --> 0:31:13.560 without cops on the beat and rules of the road. 0:31:14.880 --> 0:31:19.120 Just you know, think if you're watching soccer matches, if 0:31:19.120 --> 0:31:21.120 there were no refs on the field, what would that 0:31:21.280 --> 0:31:24.640 soccer match look like? It would look first more like rugby, 0:31:24.880 --> 0:31:26.840 and then after a while it would really look worse 0:31:27.280 --> 0:31:30.760 and fans wouldn't come to the field anymore or well 0:31:31.080 --> 0:31:37.240 most so, I really do think that it's important to 0:31:37.360 --> 0:31:42.320 have this agency, and we're part of these well regulated markets. 0:31:44.120 --> 0:31:47.480 You're listening to the Team Ken's a live program Bloomberg 0:31:47.560 --> 0:31:50.760 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:31:51.000 --> 0:31:54.120 the iHeartRadio app, and the Bloomberg Business app or listen 0:31:54.240 --> 0:31:56.360 on demand wherever you get your podcasts. 0:31:58.960 --> 0:32:02.120 We're talking about A in the context of financial services, 0:32:02.160 --> 0:32:05.400 businesses and markets. It's also a big deal basically for 0:32:05.480 --> 0:32:08.280 every other industry out there. And what does it mean 0:32:08.400 --> 0:32:11.000 for a lot of these industries and people that work 0:32:11.040 --> 0:32:14.520 in the industries, think Hollywood writers. That's come up in 0:32:14.560 --> 0:32:17.240 their discussion. Ronie A. Settholm joins us. She is a 0:32:17.280 --> 0:32:19.880 managing partner of set Home Law Group. She joins US 0:32:19.920 --> 0:32:22.240 life here in our Bloomberg Interactive Broker studio. Thank you 0:32:22.280 --> 0:32:24.960 so much for joining us. So what are some of 0:32:25.040 --> 0:32:29.680 the early thoughts within the legal community about AI. I 0:32:29.720 --> 0:32:30.840 don't know where this thing goes. 0:32:31.600 --> 0:32:33.040 Thank you for having me well. 0:32:33.120 --> 0:32:35.840 AI is definitely a hotbed topic and there are so 0:32:36.040 --> 0:32:37.760 many issues to discuss. 0:32:37.800 --> 0:32:38.480 We don't have time. 0:32:38.560 --> 0:32:41.120 We can speak for days. But you know, one thing 0:32:41.200 --> 0:32:44.400 that I'm concerned about as an attorney is the use 0:32:44.440 --> 0:32:47.080 of AI. While I don't think there's going to be 0:32:47.160 --> 0:32:51.320 a nefarious use in this labor dispute, as the technology 0:32:51.440 --> 0:32:55.560 becomes more prevalent and accessible, who knows what anyone will 0:32:55.640 --> 0:32:59.600 actually be saying. Because once I've captured you know your 0:32:59.720 --> 0:33:03.440 image and your tone using AI, I can manipulate it 0:33:03.520 --> 0:33:06.760 to say anything, and so this is going to raise 0:33:06.760 --> 0:33:08.000 a lot of eyebrows. 0:33:07.960 --> 0:33:09.680 And it's going to raise I guess a lot of. 0:33:11.560 --> 0:33:15.320 Lawsuits, right, I mean yes, for the legal industry, this 0:33:15.440 --> 0:33:16.680 is going to be a big money maker. 0:33:16.960 --> 0:33:18.640 It very well can be. 0:33:19.120 --> 0:33:22.320 You know, another legal issue that we're talking about is 0:33:23.160 --> 0:33:27.160 what kind of intellectual property rights exist when you use AI? 0:33:27.520 --> 0:33:28.560 Right now, the answer is. 0:33:28.680 --> 0:33:31.520 None, because it only protects original works created by a 0:33:31.640 --> 0:33:35.720 human being. And so there's a huge discussion now as 0:33:35.760 --> 0:33:39.120 to what is the purpose beyond making money? Of course, 0:33:39.280 --> 0:33:42.000 right you create a television show or something else using 0:33:42.040 --> 0:33:44.960 AI quickly and you make money when people watch it. 0:33:45.080 --> 0:33:47.640 Okay, fine, but do you actually own it? 0:33:48.680 --> 0:33:48.840 Yep? 0:33:49.120 --> 0:33:49.440 Likely not. 0:33:49.680 --> 0:33:51.880 So what are the like for example, just in this 0:33:52.000 --> 0:33:54.240 writer's strike. Forget the actors for the moment, but just 0:33:54.320 --> 0:33:58.560 the writer's strike. I mean, that's intellectual property that they 0:33:58.600 --> 0:33:59.200 have created. 0:33:59.400 --> 0:34:00.480 I guess the question is. 0:34:01.440 --> 0:34:02.400 There are two issues there. 0:34:02.480 --> 0:34:04.760 Right on the one hand, they don't want anyone using 0:34:04.840 --> 0:34:07.200 the IP that they've created, Right on the other hand, 0:34:07.240 --> 0:34:09.680 they're worried that AI is going to come in and 0:34:09.760 --> 0:34:12.719 write new material instead of thanks it. 0:34:13.200 --> 0:34:18.480 Yes, exactly, and depending on what their current CBA collective 0:34:18.480 --> 0:34:23.320 Bargaining agreement says, they may have already relinquished all rights 0:34:23.920 --> 0:34:25.759 to use of those materials you. 0:34:25.800 --> 0:34:27.160 Know, they've already written. 0:34:27.239 --> 0:34:30.480 I mean, for example, Sarah Silberman wrote a book and 0:34:31.840 --> 0:34:34.840 it's been I guess accessed by open ai. 0:34:37.120 --> 0:34:40.080 In training. I would guess, yes, that's exactly right. And 0:34:40.239 --> 0:34:42.680 so and now she's suing what open ai. 0:34:43.040 --> 0:34:47.200 She's suing open ai and meta and it's for copyright 0:34:47.280 --> 0:34:49.600 infringement because one of the ways you can infringe upon 0:34:49.680 --> 0:34:52.960 copyright is to utilize someone else's work to create a 0:34:53.040 --> 0:34:56.239 derivative work or maybe a sequel, you know, in more 0:34:56.360 --> 0:34:57.239 common vernacular. 0:34:57.480 --> 0:35:00.120 So, but Ronnia, this isn't a breaking new ground. This 0:35:00.200 --> 0:35:00.960 isn't you know. 0:35:01.360 --> 0:35:03.240 We don't have to create any kind of new framework 0:35:03.320 --> 0:35:04.400 to address these issues. 0:35:04.880 --> 0:35:08.520 The law is already there and it's clear, Yes, that 0:35:08.760 --> 0:35:09.120 is true. 0:35:09.280 --> 0:35:12.560 I think some of what is happening now is consumers 0:35:12.600 --> 0:35:14.960 are talking about it. Are we as consumers going to 0:35:15.160 --> 0:35:21.440 accept these AI generated copies or movies or television shows 0:35:21.560 --> 0:35:25.200 or not? Are we as consumer is going to accept 0:35:25.280 --> 0:35:29.279 AI generated anything? I mean, this is really a kind 0:35:29.360 --> 0:35:32.920 of an existential threat. Almost any job if you think 0:35:32.920 --> 0:35:33.200 about it. 0:35:33.360 --> 0:35:35.520 But again, those are two issues right on the issues, 0:35:35.600 --> 0:35:39.320 We're not going to accept theft if a company uses 0:35:39.520 --> 0:35:44.359 copyrighted material and doesn't you know, follow proper procedures there, 0:35:44.440 --> 0:35:48.240 i e. Paying some kind of royalties to Sarah Silverman 0:35:48.280 --> 0:35:51.200 in this case, that's not okay. On the other hand, 0:35:51.719 --> 0:35:56.680 if open ai writes a new comedy special with without 0:35:56.800 --> 0:35:59.120 infringing on anyone's copyright, which I don't know how that 0:35:59.160 --> 0:36:00.960 would happen because they have to train the model. 0:36:01.000 --> 0:36:03.399 But exactly I don't know how that would happen either, 0:36:03.520 --> 0:36:06.760 because AI is only as smart as the information you provide. 0:36:08.400 --> 0:36:10.520 I so I'm not just talk to myself into understanding 0:36:10.560 --> 0:36:11.120 what you were saying. 0:36:11.920 --> 0:36:12.839 Glad to feel of help. 0:36:13.719 --> 0:36:18.160 So is there sense Runnie that the legal industry. I mean, 0:36:18.200 --> 0:36:20.400 hopefully they're going to do better than our regulars in Washington, 0:36:20.440 --> 0:36:22.319 But is there any sense that there's Is there any 0:36:22.760 --> 0:36:25.640 academic work being done in the legal industry about how 0:36:25.719 --> 0:36:27.320 to look at this stuff from a legal perspective? 0:36:28.160 --> 0:36:30.320 I think it's extremely exploratory. 0:36:30.520 --> 0:36:34.239 So, just like any technology, some use of AI will 0:36:34.400 --> 0:36:38.040 be beneficial to all and some of it won't. And 0:36:38.520 --> 0:36:42.040 in fact, you're likely using AI now without even knowing right, 0:36:42.120 --> 0:36:44.680 because it's part of a lot of systems that you're 0:36:44.719 --> 0:36:47.640 currently utilizing. And so I think there has to be 0:36:47.719 --> 0:36:50.600 some regulation around how to use it and when not 0:36:50.760 --> 0:36:54.759 to use it, and there should be also some contractual 0:36:54.840 --> 0:36:58.960 provisions that attorney's right. So I represent some celebrities and 0:36:59.080 --> 0:37:03.920 some influencer and when we are working with production companies 0:37:05.120 --> 0:37:09.160 or others, they'll ask us to release the likeness, the tone, 0:37:09.520 --> 0:37:10.640 the image of the. 0:37:10.680 --> 0:37:15.960 Celebrity in perpetuity, in perpetuity and in any medium known 0:37:16.040 --> 0:37:17.719 or unknown or soon to be known. 0:37:17.880 --> 0:37:18.640 That's a wide scope. 0:37:18.760 --> 0:37:21.120 It's a very wide scope. So I think the attorneys 0:37:21.160 --> 0:37:23.200 they have a power of a pen. And when the 0:37:23.280 --> 0:37:25.520 other side says this is a deal breaker, you should 0:37:25.560 --> 0:37:27.680 just take a step back and ask yourself. 0:37:27.520 --> 0:37:29.120 Is it really a deal breaker? 0:37:29.239 --> 0:37:33.040 Or can we carve out something to keep the integrity 0:37:33.360 --> 0:37:34.920 of the image of the person. 0:37:35.680 --> 0:37:38.359 Any idea how this act that the writer's strike will 0:37:38.440 --> 0:37:41.320 play out, because I'm not sure the Well, if I 0:37:41.360 --> 0:37:43.319 were a media company, I'd be saying, hey, guys, I'd 0:37:43.360 --> 0:37:45.400 love to give you a cut of the streaming revenues 0:37:45.480 --> 0:37:47.040 or whatever. But I don't know what they're going to be. 0:37:47.680 --> 0:37:50.360 You know, I don't know how the economic side is unclear. 0:37:50.400 --> 0:37:53.840 I heard your interview yesterday with I think she was 0:37:53.880 --> 0:37:56.960 the head of a guilt Yeah, yeah, a writer's guild, 0:37:57.040 --> 0:38:00.000 and she I mean, her insistence is that these streams 0:38:00.239 --> 0:38:02.719 companies are just cashing in hand over fist and making 0:38:02.800 --> 0:38:05.960 billions and billions and billions in profits. But as we 0:38:06.120 --> 0:38:09.279 know from watching the market move every day, investors aren't 0:38:09.280 --> 0:38:09.759 sure about that. 0:38:09.920 --> 0:38:12.600 No exactly, so any sense of how this might play out? 0:38:12.640 --> 0:38:14.279 It seems like it could go on for a long time. 0:38:14.440 --> 0:38:16.239 It can go on for a long time, but I 0:38:16.360 --> 0:38:19.200 think as more people feel the pain, they'll have to 0:38:19.280 --> 0:38:22.520 be some compromises. Right now, it seems like everyone has 0:38:22.600 --> 0:38:26.840 their dukes up yea, and nobody cares about the you know, fringes. 0:38:27.080 --> 0:38:31.520 But this strike is not only affecting writers and actors. 0:38:31.680 --> 0:38:35.080 It's affecting so many other people in the professional Tangentially. 0:38:35.320 --> 0:38:39.239 It reminds me tangentially of the lawsuits we saw flare 0:38:39.320 --> 0:38:42.799 up over NFTs. Yes, and I wonder did we ever 0:38:42.920 --> 0:38:46.680 sort that out? For example, Quentin Tarantino wanted to make 0:38:46.680 --> 0:38:47.280 an NFT. 0:38:47.640 --> 0:38:49.040 I think of his script for. 0:38:51.400 --> 0:38:53.759 Paul Fiction, right, but the Studio said no, no, no, no, 0:38:53.880 --> 0:38:55.840 Hang on a second, we own that script, you know, 0:38:55.920 --> 0:38:58.200 even though you have the physical paper copy in his hand. 0:38:58.320 --> 0:39:01.960 So there were similar copyright issues coming up around Crypto. 0:39:02.760 --> 0:39:03.360 Yes, well, the. 0:39:03.400 --> 0:39:06.520 Copyright laws are the same, they're applied across the board. 0:39:07.000 --> 0:39:09.120 But again a lot of this can be taken care 0:39:09.160 --> 0:39:14.480 of contractually, hence this strike. But here neither side seems 0:39:14.480 --> 0:39:18.120 to be communicating very well, and that always ends badly. 0:39:18.520 --> 0:39:20.400 All right, Ronnie, thank you so much for joining us. 0:39:20.440 --> 0:39:23.040 Lots of issues out there for you guys to figure out. 0:39:23.080 --> 0:39:26.200 Ronnie is set Home Managing Partner, set Home Lawgroup. 0:39:26.680 --> 0:39:29.759 You're listening to the tape Cat's are live program Bloomberg 0:39:29.880 --> 0:39:33.440 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:39:33.520 --> 0:39:36.719 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:39:36.800 --> 0:39:39.560 You can also listen live on Amazon Alexa from our 0:39:39.640 --> 0:39:44.000 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:39:46.000 --> 0:39:49.280 Cam Harvey, he's professor finance down there at the Duke University. 0:39:49.280 --> 0:39:50.680 All right, let me explain to how this works at 0:39:50.719 --> 0:39:53.120 FUCA when I was there. Here's the grading system pass, 0:39:54.000 --> 0:39:57.399 high pass, Superior pass, anything below pass you don't want 0:39:57.400 --> 0:40:00.360 to talk about now. On Cam Harvey's class Futures Options. 0:40:00.400 --> 0:40:01.480 I think I don't know what it was. It was 0:40:01.560 --> 0:40:04.680 something very hard. I didn't say with great comments. I 0:40:04.760 --> 0:40:08.320 probably did not get a superior pass. There's chance I 0:40:08.400 --> 0:40:10.839 got a high pass. But if I had to put 0:40:10.920 --> 0:40:14.359 money on it, I put it pass. Yeah, but that's okay. 0:40:14.360 --> 0:40:16.279 Well, and you're not an economist, and what we said, 0:40:16.320 --> 0:40:17.359 we still have questions to ask. 0:40:17.400 --> 0:40:18.800 You still have questions. What we said back in the 0:40:18.880 --> 0:40:22.359 day is twenty p's twenty passes equals sixty g's, which 0:40:22.440 --> 0:40:23.840 was the going right on Wall Street for You're in 0:40:23.880 --> 0:40:25.920 the NBA, so all you had to do is pass. 0:40:26.000 --> 0:40:28.800 That's a really materialistic way to look at in your generation. 0:40:28.960 --> 0:40:31.279 That's why expiration because I played golf every day. Hey, 0:40:31.360 --> 0:40:33.520 camp professor, thanks so much for joining us here. What 0:40:33.600 --> 0:40:36.000 did you take away from boy? We had a lot 0:40:36.040 --> 0:40:38.000 of central bank speak over the past couple of days, 0:40:38.040 --> 0:40:40.440 with the ECB this morning and the FED yesterday. What 0:40:40.520 --> 0:40:42.839 are you taking away from some of these central bankers. 0:40:44.920 --> 0:40:51.200 That they fundamentally are misjudging the inflation threat? It is 0:40:51.880 --> 0:40:57.120 It is shocking to me that you just need to 0:40:57.200 --> 0:41:00.960 look at the data. Look at the most recent inflation release, 0:41:01.480 --> 0:41:06.719 which was three percent, and actually the more precise number 0:41:07.160 --> 0:41:12.000 was two point nine seven percent. And if you look 0:41:12.040 --> 0:41:16.280 at the drivers of inflation, the main driver is shelter. 0:41:17.080 --> 0:41:21.520 So shelter is a little over one third of the CPI, 0:41:22.600 --> 0:41:27.080 and shelter is running at seven point eight percent. So 0:41:27.360 --> 0:41:31.280 let's do some really simple math. The contribution of shelter 0:41:31.760 --> 0:41:36.279 to that three percent print is about one third of 0:41:36.800 --> 0:41:41.520 seven point eight percent, and that comes to about two 0:41:41.600 --> 0:41:46.440 point six percent. So almost ninety percent of the inflation 0:41:46.600 --> 0:41:51.800 print was shelter, and shelter is not running at seven 0:41:51.880 --> 0:41:54.120 point eight percent. So you look at the data, you 0:41:54.200 --> 0:41:57.280 look at rents year over year, you look at housing prices, 0:41:57.719 --> 0:42:00.560 it's close to flat or one percent or two percent, 0:42:01.360 --> 0:42:05.879 and it's because shelter lags. So that's seven point eight 0:42:05.880 --> 0:42:09.160 percent is reflecting stuff from six to nine months ago. 0:42:09.719 --> 0:42:12.560 If we use the real data, the inflation is not 0:42:12.680 --> 0:42:17.160 three percent, is one point five percent, and it seems 0:42:17.600 --> 0:42:21.879 to give the reason that, oh, well, inflation is still there. 0:42:22.400 --> 0:42:25.840 It's three percent, that it's not two percent. It's a 0:42:26.120 --> 0:42:32.120 false logic, a totally false logic. So this increase that 0:42:32.239 --> 0:42:36.480 the FED just did was completely unnecessary. It increases the 0:42:36.719 --> 0:42:41.880 risk in many different dimensions that we are pushed into 0:42:42.560 --> 0:42:44.280 an unnecessary recession. 0:42:44.920 --> 0:42:49.120 So, Professor Harvey, this is Barry Ridults. Let's pretend I'm 0:42:49.160 --> 0:42:52.600 in your class at school, and I want to argue 0:42:52.760 --> 0:42:58.400 this proposition that the not only have we seen homes 0:42:58.560 --> 0:43:02.160 underbuilt since the ear and the financial crisis, but the 0:43:02.440 --> 0:43:07.040 FED raising rates as aggressively as they have are actually 0:43:07.880 --> 0:43:13.839 making owners' equivalent rent and apartment rentals more expensive. They're 0:43:13.960 --> 0:43:18.279 forcing people who would otherwise be home buyers into the 0:43:18.360 --> 0:43:21.960 rental market. What's the number, Something like sixty one percent 0:43:22.040 --> 0:43:26.239 of homeowners with mortgages are at four percent or less 0:43:26.800 --> 0:43:28.640 and they don't want to pay seven and a half 0:43:28.680 --> 0:43:31.880 percent more for a mortgage. Should the is the FED 0:43:32.080 --> 0:43:37.879 two title ready? Are they accidentally driving owners equivalent rent 0:43:37.920 --> 0:43:39.480 and CPI higher? 0:43:41.360 --> 0:43:41.560 Yeah? 0:43:41.800 --> 0:43:47.399 So, very great points, And you just need to look 0:43:47.440 --> 0:43:52.520 at the data. So if you go to Zillow or 0:43:52.680 --> 0:43:56.560 red fan, you see that rents year every year are 0:43:56.680 --> 0:44:01.440 running at one percent, zero percent been in a negative territory. 0:44:01.719 --> 0:44:06.279 There's a big disconnect between what people are paying and 0:44:06.480 --> 0:44:10.000 what is in the actual SPI. And we've seen this before. 0:44:10.120 --> 0:44:12.960 This is not new. This is the mistake the FED 0:44:13.080 --> 0:44:18.560 made initially in thinking that inflation was transitory, that the 0:44:19.120 --> 0:44:23.080 numbers that were using for owner's equivalent rent were really 0:44:23.200 --> 0:44:26.880 really low, when we could observe in the market that 0:44:27.840 --> 0:44:31.920 it was much higher. And there's a reason for these legs. 0:44:32.360 --> 0:44:36.240 So the lag makes sense. So if there's rental inflation, 0:44:36.560 --> 0:44:39.960 for example, it goes up by ten percent, well that 0:44:40.120 --> 0:44:44.600 only hits you if you have to have your lease renewed, 0:44:45.080 --> 0:44:47.839 and many people have a longer lease, so that ten 0:44:47.880 --> 0:44:52.720 percent inflation wouldn't be realized until you actually renew your lease. 0:44:53.160 --> 0:44:56.400 So there's a natural leg. And my point is that 0:44:56.719 --> 0:45:02.080 this component, which is driving ninety percent of the current inflation, 0:45:02.800 --> 0:45:06.399 that is going to head down. It just takes a while. 0:45:07.160 --> 0:45:10.680 And again this is very similar to what we saw 0:45:11.719 --> 0:45:15.800 with the so called transitory inflation, that that inflation is 0:45:15.880 --> 0:45:22.000 substantially mitigated. And the other point you're making about increasing 0:45:22.080 --> 0:45:25.919 the rates causing problems, it's like two sided. So those 0:45:25.960 --> 0:45:32.160 that have mortgages that are already attractive, you're correct, that 0:45:32.400 --> 0:45:36.960 is the disincentive to move, and it does put pressure 0:45:37.040 --> 0:45:40.279 on the rental market. But again looking at the data, 0:45:40.440 --> 0:45:44.680 we don't see that rental inflation. We saw it go up, 0:45:45.000 --> 0:45:48.920 but now it's down and that partends the future. And 0:45:49.000 --> 0:45:52.880 again it undercuts very substantially the fed's logic. 0:45:53.480 --> 0:45:57.360 And yes, so, professor, does does this mean that the 0:45:57.440 --> 0:46:01.960 FED is going to push us into asion? And I 0:46:02.080 --> 0:46:05.080 want to bring in also your yield curve inversion to 0:46:05.160 --> 0:46:07.560 the discussion, because I have in front of me the 0:46:07.680 --> 0:46:10.440 three month ten year yield curve. We're looking at an 0:46:11.040 --> 0:46:14.320 inversion of one hundred and fifty basis points basically, And 0:46:15.040 --> 0:46:18.040 I was talking about Jeff Sherman from Double Line earlier. 0:46:18.160 --> 0:46:23.160 He thinks that that signal signals a deep recession and he's, 0:46:23.480 --> 0:46:25.680 you know, very concerned about it over there. 0:46:25.960 --> 0:46:26.520 Is that fair? 0:46:26.680 --> 0:46:28.600 Do you think when you look at the history of 0:46:28.680 --> 0:46:30.960 this yield curve inversion does it? 0:46:31.200 --> 0:46:31.440 Does it? 0:46:32.120 --> 0:46:33.600 Is it a good signal for a recession? 0:46:34.560 --> 0:46:34.759 Yeah? 0:46:34.880 --> 0:46:37.480 So, as you know, this is my dissertation at the 0:46:37.560 --> 0:46:41.000 University of Chicago, and at the time pretty good. It 0:46:41.160 --> 0:46:43.839 was like four out of four. Now it's eight out 0:46:43.880 --> 0:46:46.200 of eight without a fault signal. And we've had this 0:46:46.360 --> 0:46:52.800 inversion that is like ten months inversion. 0:46:52.400 --> 0:46:53.600 And without a false signal. 0:46:53.680 --> 0:46:56.920 Is an important clause because Rick Reader was on with 0:46:57.040 --> 0:46:58.560 us the other day from black Rock, and he said, 0:46:58.600 --> 0:47:01.040 the yield curve inversion is forecast nine out of the 0:47:01.120 --> 0:47:02.759 last three recessions or something like that. 0:47:03.200 --> 0:47:05.600 But I think people look at it two. 0:47:06.719 --> 0:47:10.520 Yeah, yeah, it's totally false, And of course you need 0:47:10.680 --> 0:47:14.640 to There could be a part of the yell curve 0:47:14.920 --> 0:47:17.560 that you choose that's got a lot of false signals. 0:47:17.840 --> 0:47:20.920 I'm talking about what I chose, the ten year minus 0:47:20.960 --> 0:47:23.640 three month, and that doesn't have any fault signals yet. 0:47:24.000 --> 0:47:27.520 Of course it could be a false signal, but it's 0:47:27.600 --> 0:47:33.560 too early to declare a false signal. The lead time varies, 0:47:34.160 --> 0:47:38.719 so that's not consistent. So the lead time has been 0:47:38.760 --> 0:47:42.520 as short as five months and as long as twenty 0:47:42.600 --> 0:47:47.200 two months, so it's too early to tell. But again, 0:47:48.040 --> 0:47:50.080 let's not just look at this signal, but look at 0:47:50.120 --> 0:47:54.840 the economic logic as to what is happening when you 0:47:55.080 --> 0:48:00.600 severely invert the ill curve, and when you averted in 0:48:00.880 --> 0:48:04.000 a way where short rates and long rates go up, 0:48:04.680 --> 0:48:09.560 then you were stressing the financial system. So an inverted 0:48:09.600 --> 0:48:12.839 deal curve is bad for banks because it hits profitability 0:48:13.280 --> 0:48:16.880 because they're paying a short term rate and kind of 0:48:16.920 --> 0:48:20.040 receiving a long term rate. But when that longer term 0:48:20.120 --> 0:48:24.080 rate also goes up, that hits the balance sheet also. 0:48:24.480 --> 0:48:28.520 And we've already seen this play out in March in 0:48:28.680 --> 0:48:34.760 terms of you know, some banks failing. So this puts 0:48:35.080 --> 0:48:40.320 stress on the financial system and it creates other issues 0:48:40.760 --> 0:48:41.240 in addition. 0:48:41.719 --> 0:48:46.120 So, Professor, given how rapidly the FED has been raising rates, 0:48:46.600 --> 0:48:49.799 and given that we've spent so much time at zero 0:48:50.560 --> 0:48:54.080 in the last moments we have, how impactful has that 0:48:54.719 --> 0:48:57.000 rapidity been to this inverted deal curve? 0:48:58.280 --> 0:49:04.520 Yeah, so, the the scale of the inversion is unprecedented 0:49:05.400 --> 0:49:07.960 in the data that I've looked at. So of all 0:49:08.040 --> 0:49:11.960 of the inversions is number nine, this one is the 0:49:12.200 --> 0:49:17.239 largest relative to the long term rate. So we're in 0:49:17.760 --> 0:49:21.440 an area of the data that we've never seen before. 0:49:22.239 --> 0:49:26.240 And on top of that, the FED is pushed very quickly. 0:49:27.080 --> 0:49:30.960 And in January I said, given my look at the 0:49:31.520 --> 0:49:35.520 shelter data in inflation, they should stop. They did not stop. 0:49:36.040 --> 0:49:39.800 And what they're doing is just increasing the risk of 0:49:39.920 --> 0:49:43.799 a hard landing. It seems there calculus is unemployment has 0:49:43.840 --> 0:49:46.560 to increase, people have to be thrown out of their job. 0:49:46.800 --> 0:49:50.319 That is not necessary. We don't need a reset, all. 0:49:50.280 --> 0:49:52.280 Right, Caim, thank you so much for joining us, Campbell Harvey. 0:49:52.280 --> 0:49:54.120 He's a professor of finance at the Fucal School of 0:49:54.200 --> 0:49:57.799 Business at Duke University. I appreciate getting his thoughts here 0:49:57.880 --> 0:50:01.719 on the Central Banks and on the Inverted Yield cover. 0:50:02.040 --> 0:50:05.120 You're listening to the tape can Tour live program Bloomberg 0:50:05.239 --> 0:50:08.759 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:50:08.880 --> 0:50:12.080 tune in app, Bloomberg dot Com, and the Bloomberg Business app. 0:50:12.160 --> 0:50:14.920 You can also listen live on Amazon Alexa from our 0:50:15.000 --> 0:50:19.360 flagship New York station Just say Alexa, play Bloomberg eleven thirty, 0:50:21.360 --> 0:50:21.879 What a Deed? 0:50:22.080 --> 0:50:26.000 Even deeper into metas earnings reports CEO Mark Zuckerberg, saying, 0:50:26.000 --> 0:50:28.400 look quote, we continue to see strong engagement across our 0:50:28.400 --> 0:50:31.000 apps with the most exciting roadmap I've seen in a while. 0:50:31.080 --> 0:50:34.520 Our investments in AI will continue. We remain fully committed 0:50:34.880 --> 0:50:38.160 to the metaverse vision as well. Let's again further with 0:50:38.400 --> 0:50:41.640 Meta Chief Financial Officer Susan Lee joining us. And it's 0:50:41.719 --> 0:50:46.719 not just Mark finding things, exciting investors, analysts, upgrading exciting 0:50:46.800 --> 0:50:49.759 economy for the world at large. Today it feels here 0:50:49.800 --> 0:50:53.000 in the United States, how excited Susan, are your clients 0:50:53.120 --> 0:50:57.319 right now how resilient is this digital ad spending well? 0:50:57.360 --> 0:50:59.880 First of all, thank you Ed Andternline for having me at. 0:51:00.200 --> 0:51:02.239 It's a pleasure to be with you guys and with 0:51:02.320 --> 0:51:04.759 your viewers this morning. You know you noted that we 0:51:04.880 --> 0:51:08.160 reported really strong Q two results. We're really happy with 0:51:09.680 --> 0:51:12.520 all of our execution efforts across our core user and 0:51:12.600 --> 0:51:16.239 engagement metrics. Obviously, the reacceleration in our ad revenue which 0:51:16.239 --> 0:51:19.000 we've been talking about and you know which we think 0:51:19.200 --> 0:51:22.600 is the is the reflection both of an improvement in 0:51:22.640 --> 0:51:25.719 the macroeconomic landscape which the digital ads market is so 0:51:25.960 --> 0:51:30.160 closely tied to, along with our own efforts continuing to 0:51:30.280 --> 0:51:33.879 invest in and execute on quarters and years of work 0:51:34.120 --> 0:51:38.080 in making sure that our ad systems are performing well, 0:51:38.160 --> 0:51:40.840 that we're delivering measurable results for our advertisers, and we 0:51:40.960 --> 0:51:43.759 really have seen those results bear fruit. 0:51:44.200 --> 0:51:45.920 So that's something we're really excited about. 0:51:45.960 --> 0:51:49.200 In Q two, we also talked about how our year 0:51:49.239 --> 0:51:52.440 of efficiency work is really setting us up for success 0:51:52.600 --> 0:51:53.320 going forward. 0:51:53.800 --> 0:51:55.400 I think it's put us into a place. 0:51:55.239 --> 0:51:57.560 Where we have a leaner cost structure which will serve 0:51:57.640 --> 0:51:59.879 us well as we plan for the future, and it's 0:52:00.040 --> 0:52:03.160 also enabling us to move faster, to build more and 0:52:03.200 --> 0:52:06.719 ship more quickly new products and experiences in service of 0:52:07.040 --> 0:52:10.320 what of our customers, and so Mark talked about this 0:52:10.480 --> 0:52:13.280 yesterday on the call. Threads is a really good example 0:52:13.360 --> 0:52:16.120 of that. It's something that we built with a relatively 0:52:16.320 --> 0:52:19.360 smaller team on a tighter timeline, and I think is 0:52:19.400 --> 0:52:23.600 a good reflection of the year of efficiency paying off 0:52:23.680 --> 0:52:26.880 for us. Finally, the last theme I'd highlight from our 0:52:26.920 --> 0:52:30.160 earnings call is around twenty twenty four, we have I 0:52:30.239 --> 0:52:33.800 think a lot of compelling opportunities to invest in. We 0:52:33.960 --> 0:52:36.759 talked about our AI investments and how that will flow 0:52:36.840 --> 0:52:40.359 through and too infrastructure costs. We talked about hiring top 0:52:40.440 --> 0:52:43.239 tier technical talent as we evolve our workforce towards a 0:52:43.280 --> 0:52:46.160 more technical mix, and then of course our longer term 0:52:46.239 --> 0:52:49.800 ambitions and vision for reality labs and for the metaverse. 0:52:50.640 --> 0:52:54.600 You know, AI also seen Susan two AI recommendations on 0:52:54.680 --> 0:52:59.160 the timeline to have a real impact on engagement, particularly 0:52:59.239 --> 0:53:01.960 on the core FACEOK platform. How much is that a 0:53:02.120 --> 0:53:05.560 driver behind the forecast for the current period of thirty 0:53:05.600 --> 0:53:07.520 four point five billion dollars in sales. 0:53:08.719 --> 0:53:09.640 It's a great question. 0:53:10.280 --> 0:53:12.279 First, I want to say we have been investing in 0:53:12.360 --> 0:53:15.560 AI for a really long time. We often use the 0:53:15.640 --> 0:53:18.160 phrase core AI to talk about the work that's been 0:53:18.280 --> 0:53:21.960 powering our ranking and recommendations engines, which are really the 0:53:22.080 --> 0:53:26.120 foundation of both our organic recommendations for the content that 0:53:26.200 --> 0:53:26.800 you see. 0:53:26.920 --> 0:53:28.200 Along with the ADS work. 0:53:28.800 --> 0:53:32.040 And in particular, one of the big drivers of growth 0:53:32.600 --> 0:53:36.879 that's been both strong on our platforms and increasingly incremental 0:53:37.320 --> 0:53:40.959 is around recommending content from accounts that you don't already follow. 0:53:41.040 --> 0:53:44.279 We often call this unconnected content, and that's been really 0:53:44.320 --> 0:53:47.040 good for core engagement trends. And then of course the 0:53:47.160 --> 0:53:51.160 AI investments, as we've put GPU capacity towards our ADS, 0:53:51.280 --> 0:53:54.400 ranking and recommendation systems have really paid off. So I 0:53:54.480 --> 0:53:58.240 think that's really translating both into the results that you've seen. 0:53:58.520 --> 0:54:01.120 It's part of what factors and to our guidance, along 0:54:01.200 --> 0:54:04.640 with of course a big range of possible macroeconomic outcomes. 0:54:05.360 --> 0:54:08.360 At the same time, we're really excited about a newer 0:54:08.480 --> 0:54:12.279 opportunity ahead of us in the GENAI space, and that's 0:54:12.360 --> 0:54:17.040 really around building compelling new consumer experiences. Mark talked about 0:54:17.080 --> 0:54:19.440 some of the things we're working on on the call yesterday, 0:54:20.360 --> 0:54:24.600 making it easier for people to create better, more individualized content, 0:54:25.080 --> 0:54:27.480 and then of course also making it easier for businesses 0:54:27.640 --> 0:54:30.919 to communicate with the consumers that they want to reach. 0:54:31.560 --> 0:54:32.880 That is newer for us. 0:54:33.320 --> 0:54:36.800 That's not factored into our revenue guidance or our revenue 0:54:36.840 --> 0:54:40.440 outlook in any meaningful way, but it's something that we're 0:54:40.480 --> 0:54:44.040 really excited about the opportunity to build new and compelling experiences, 0:54:44.120 --> 0:54:46.720 and we think it'll be an important part of our future. 0:54:47.560 --> 0:54:52.480 Susan, why did Meta change its mind about charging cloud 0:54:52.560 --> 0:54:59.040 providers for access to Lama too, I'm not. 0:54:59.080 --> 0:55:00.440 Sure what you mean by changed. 0:55:00.840 --> 0:55:04.120 By changing our mind, we've made Lama to free and 0:55:04.239 --> 0:55:08.280 widely accessible. They're a small handful of really large cloud 0:55:08.320 --> 0:55:13.360 providers that we're working on specific arrangements with, but broadly speaking, 0:55:13.440 --> 0:55:15.920 we expect this to be free, and we want it 0:55:15.960 --> 0:55:19.719 to be accessible to a really to a really wide 0:55:19.840 --> 0:55:21.400 range of possible use cases. 0:55:21.760 --> 0:55:23.840 Cloud providers, will they be charged anything. 0:55:27.160 --> 0:55:30.040 This is a place where, again with very specific cloud 0:55:30.080 --> 0:55:33.200 providers who have very large user bases. Again we're working 0:55:33.280 --> 0:55:36.200 on specific arrangements with them, but it's not something that 0:55:36.320 --> 0:55:38.160 we broadly anticipate charging. 0:55:37.920 --> 0:55:40.359 For and of course, we're all waiting to see when 0:55:40.400 --> 0:55:43.800 you turn on the money funnel from Threads. I'm interested 0:55:43.840 --> 0:55:46.960 as to how much inbound you're getting from clients, how 0:55:47.080 --> 0:55:50.799 many want the capacity to start advertising alongside Threads. 0:55:50.840 --> 0:55:55.640 At the moment, you know, we're really very pleased with Threads. 0:55:55.680 --> 0:55:58.720 It's a new standalone app that you know, we released 0:55:58.800 --> 0:56:02.439 earlier this month, and we're where it is in both 0:56:02.960 --> 0:56:06.080 user growth terms as well as engagement and retention trends. 0:56:06.200 --> 0:56:08.239 Is certainly ahead of where we would have expected for 0:56:08.520 --> 0:56:11.840 a brand new standalone app, but it's incredibly early in 0:56:11.920 --> 0:56:14.360 its life cycle. This is not something that we expect 0:56:14.400 --> 0:56:16.800 that we're going to monetize in the near term. We 0:56:16.960 --> 0:56:19.920 know when we launch new consumer experiences that there is 0:56:19.960 --> 0:56:23.759 a playbook around all of the product foundation work that 0:56:23.840 --> 0:56:26.879 needs to be done, around core features that users will 0:56:26.920 --> 0:56:30.680 ask for, being responsive to things that futures users are 0:56:30.719 --> 0:56:33.840 looking for in the product, scaling it over time to 0:56:33.920 --> 0:56:38.000 a much larger user base, focusing on driving increased engagement 0:56:38.080 --> 0:56:40.279 and retention. Those are all things that we're going to 0:56:40.560 --> 0:56:44.360 need to do in advance of thinking about monetization. But 0:56:44.440 --> 0:56:47.480 it's a playbook that we've executed multiple times and We're 0:56:47.560 --> 0:56:50.000 excited for the opportunity to do that again here. 0:56:51.239 --> 0:56:53.520 Susan, I think I'm right in saying you a Facebook 0:56:53.680 --> 0:56:57.239 employee number four hundred and something, four hundred and eight. 0:56:57.920 --> 0:57:03.440 How has the launched a Threads compared internally to bringing 0:57:03.520 --> 0:57:07.480 in Instagram, WhatsApp, the launch of the hardware business and quest. 0:57:09.920 --> 0:57:10.120 Yeah. 0:57:10.160 --> 0:57:13.520 So I joined then Facebook back in two thousand and 0:57:13.520 --> 0:57:15.640 eight when they're around four hundred people here, and so 0:57:16.120 --> 0:57:18.080 I've seen us launch a lot of things over the 0:57:18.160 --> 0:57:20.680 course of that period. Now, some of those examples that 0:57:20.760 --> 0:57:24.040 you mentioned, like Instagram obviously were already popular apps when 0:57:24.040 --> 0:57:26.800 we acquired them. But I think that over the course 0:57:26.880 --> 0:57:29.120 of that time, we've learned a lot of things about 0:57:29.200 --> 0:57:31.959 how to bring products to market, thinking about the trade 0:57:32.000 --> 0:57:36.000 offs between standalone apps or features within existing apps. We've 0:57:36.080 --> 0:57:38.520 learned a lot in our growth playbook and how to 0:57:38.640 --> 0:57:40.960 drive engagement and retention, and I think we're going to 0:57:41.000 --> 0:57:43.280 bring a lot of those lessons to the way that 0:57:43.360 --> 0:57:45.440 we execute against our vision for Threads. 0:57:47.240 --> 0:57:53.000 Caroline asked you about the inbound interest your existing advertisers, saying, Hey, Susan, 0:57:53.120 --> 0:57:55.640 when can I put something on the Threads platform. I 0:57:55.680 --> 0:57:59.880 know you're being conservative and careful about the development, and 0:58:00.080 --> 0:58:02.840 that mark emphasize a lot of product work needs to 0:58:02.880 --> 0:58:05.080 be done as well. But how do you see the 0:58:05.200 --> 0:58:08.920 roadmaps for Threads going, you know, how do you change 0:58:08.960 --> 0:58:10.680 the product so it is monetizable. 0:58:12.440 --> 0:58:16.240 Well, we're excited obviously that there is interest both in Threads, 0:58:16.280 --> 0:58:19.160 the consumer product and of course the eventual prospect of 0:58:19.240 --> 0:58:20.080 advertising on it. 0:58:20.520 --> 0:58:22.600 But it's really just too early, i think. 0:58:22.480 --> 0:58:26.080 To be very specific about what the ads business on 0:58:26.240 --> 0:58:29.240 thread will look like in detail. We're really focused on 0:58:29.400 --> 0:58:33.160 executing on the consumer experience first, making it a great 0:58:33.280 --> 0:58:36.960 and productive and friendly place for people to have public conversations, 0:58:37.520 --> 0:58:41.400 growing it to scale, investing in the features that people want, 0:58:41.520 --> 0:58:43.400 and we'll get to monetization at the right time. 0:58:44.000 --> 0:58:46.760 Of course, us in the media had a field day 0:58:46.800 --> 0:58:50.280 thinking about the competitive force that Threads is Visa VX, 0:58:50.400 --> 0:58:53.200 and then we think about the competition more broadly, you 0:58:53.440 --> 0:58:56.120 versus TikTok, when I'm thinking of the success of reels 0:58:56.120 --> 0:58:58.880 of late, when we're actually more broadly thinking about how 0:58:59.000 --> 0:59:02.680 Meta makes it self not just the money spinner, but 0:59:02.800 --> 0:59:06.280 a culture spinner here where people start trends not just 0:59:06.320 --> 0:59:09.440 perhaps copy them from TikTok and bring them on to reels. 0:59:09.760 --> 0:59:11.640 Do you feel you've got that now at Meta? 0:59:14.040 --> 0:59:16.600 I think that we've been, over the course of the 0:59:16.680 --> 0:59:20.160 time that I've been here, you know, constantly focused on innovation, 0:59:21.400 --> 0:59:23.040 and I think that we've brought that to bear with 0:59:23.280 --> 0:59:25.680 a lot of the experiences in our family of apps. 0:59:25.880 --> 0:59:28.240 And at the same time, when there are clear secular 0:59:28.360 --> 0:59:32.000 trends in the industry in terms of formats or experiences 0:59:32.160 --> 0:59:35.000 that consumers are looking for, we look to integrate those too, 0:59:35.520 --> 0:59:37.200 and I think we've done a really good job at 0:59:37.240 --> 0:59:40.320 executing on both of those fronts. And then of course, 0:59:40.800 --> 0:59:43.920 looking forward, I think we're really excited about the innovation 0:59:44.080 --> 0:59:48.000 opportunities ahead of us. With Jenai, we think we're industry 0:59:48.120 --> 0:59:51.240 leading here and then of course over the very long. 0:59:51.200 --> 0:59:53.640 Term with our vision for reality labs and the Metaverse. 0:59:54.560 --> 0:59:57.320 We are of course with the Meta Chief financial Officers 0:59:57.360 --> 1:00:01.040 Susan Lee, We're welcome across TV and with our audiences 1:00:01.120 --> 1:00:04.520 and Susan, I've all started talking about everything apps now. 1:00:04.560 --> 1:00:07.840 I know you're about the money, not always developing the product, 1:00:08.160 --> 1:00:10.600 but you think about everything app as Meta as there 1:00:10.640 --> 1:00:12.800 a race on to ensure that we can build that 1:00:12.880 --> 1:00:14.000 here in the us, and you'll. 1:00:13.840 --> 1:00:14.280 Be part of it. 1:00:16.000 --> 1:00:16.920 It's a great question. 1:00:17.200 --> 1:00:19.320 I know that there are other regions around the world, 1:00:19.360 --> 1:00:21.760 in particular Asia, where there are apps that have gone 1:00:21.840 --> 1:00:24.400 down this model. That's not a model that we have 1:00:24.640 --> 1:00:27.200 right now. We haven't seen that use case to the 1:00:27.240 --> 1:00:32.320 same extent in North America. But you know, I would 1:00:32.360 --> 1:00:35.000 say that we're really invested in the opportunities that we 1:00:35.160 --> 1:00:37.600 have ahead of us across our family of apps right now, 1:00:38.160 --> 1:00:41.640 including Threads, which is the newest standalone app in our portfolio. 1:00:42.240 --> 1:00:43.800 And then there's just a lot that we can do 1:00:44.000 --> 1:00:47.240 to make the experiences across our family of apps richer 1:00:47.320 --> 1:00:50.160 and more engaging with the investments that we've made already 1:00:50.240 --> 1:00:54.680 in AI and especially recommending content that you don't already follow, 1:00:54.800 --> 1:00:58.160 and we know that that's brought richer content experiences to people, 1:00:58.480 --> 1:01:03.560 is growing engagement across the apps, and we'll release you know, 1:01:03.680 --> 1:01:06.640 we'll be releasing features over the course of the next years. 1:01:06.640 --> 1:01:08.600 But we're really excited about what we think that this 1:01:08.760 --> 1:01:11.320 is going to bring to bear for the consumer experience 1:01:11.400 --> 1:01:14.440 and of course also eventually for businesses to connect with 1:01:14.520 --> 1:01:16.640 consumers across the family of apps too. 1:01:17.720 --> 1:01:21.000 Susan investors were sanguine about the idea that expenses could 1:01:21.040 --> 1:01:23.200 creep up. I want if you just tell us what 1:01:23.280 --> 1:01:28.000 your priorities are, where you'll invest in talent in the metaverse, 1:01:28.040 --> 1:01:30.440 whether your investments will be on the content side or 1:01:30.480 --> 1:01:31.440 the hardware side. 1:01:33.240 --> 1:01:33.800 Great question. 1:01:34.560 --> 1:01:36.360 We talked about this a little bit on the call 1:01:36.480 --> 1:01:38.920 yesterday when we gave some coller into the twenty twenty 1:01:38.960 --> 1:01:41.920 four outlook. The three themes that I really want to 1:01:41.960 --> 1:01:45.240 talk about there are. First, we expect that our infrastructure 1:01:45.280 --> 1:01:47.720 costs are going to grow because of the investments we've 1:01:47.760 --> 1:01:51.680 made in AI, building GPU capacity, you know, that will 1:01:51.720 --> 1:01:54.320 go towards both the core AI work and the ranking 1:01:54.400 --> 1:01:57.040 and recommendation engines that I talked about, along with the 1:01:57.120 --> 1:02:00.600 new GENAI investments. So that's a place where we're investing 1:02:00.880 --> 1:02:03.840 certainly in a lot of hardware, along with the infrastructure 1:02:04.440 --> 1:02:06.800 such as data centers and network equipment that you need 1:02:06.880 --> 1:02:09.800 to support that. The second area that we talked about 1:02:09.960 --> 1:02:13.240 is we are evolving our workforce toward a more technical mix, 1:02:13.800 --> 1:02:16.000 you know, and we want to hire top tier technical 1:02:16.120 --> 1:02:21.040 talent where we can towards some of our most compelling opportunities, 1:02:21.240 --> 1:02:25.040 including AI and machine learning engineers to work on the 1:02:25.120 --> 1:02:28.040 AI efforts we talked about, and so that's a place 1:02:28.120 --> 1:02:31.040 where we are going to be investing, but we're going 1:02:31.120 --> 1:02:33.680 to be doing it in a very thoughtful way, making 1:02:33.720 --> 1:02:36.480 sure that we're really focusing on the core priorities and 1:02:36.600 --> 1:02:39.440 making trade offs we're appropriate. The third thing that we 1:02:39.560 --> 1:02:42.280 talked about is on the reality lab side. That's certainly 1:02:42.360 --> 1:02:45.560 a very long time horizon and ambitious vision, and we're 1:02:45.600 --> 1:02:47.880 going to be investing in deploying capital toward it. 1:02:48.720 --> 1:02:51.840 The capital coming from that you already have. Are you 1:02:51.920 --> 1:02:53.800 looking at the bond market, are you looking at raising 1:02:53.880 --> 1:02:54.400 more funds? 1:02:56.680 --> 1:03:00.840 You know, we certainly generate enough free cash flow right 1:03:00.920 --> 1:03:04.400 now for us to invest across the organic opportunities ahead 1:03:04.400 --> 1:03:07.760 of us that we see that are compelling. We have 1:03:08.000 --> 1:03:11.760 been raising that we did earlier this year, just as 1:03:11.760 --> 1:03:14.800 we're evolving our capital structure going forward, and that's something 1:03:14.880 --> 1:03:16.760 that will continue to look at and I think do 1:03:16.920 --> 1:03:20.720 on a measured pace going forward. But in terms of 1:03:20.800 --> 1:03:23.640 thinking about the capital available to us now, you know, 1:03:23.720 --> 1:03:26.360 we generate a lot of capital that we're always looking 1:03:26.440 --> 1:03:29.720 to allocate across the organic opportunities that we have, and 1:03:29.800 --> 1:03:31.919 we've talked about some of those and then of course 1:03:32.040 --> 1:03:33.400 shareholder returns. 1:03:33.760 --> 1:03:36.040 Susan really quickly before we lose you. How do you 1:03:36.160 --> 1:03:39.120 and Mark split up responsibilities at the company. What's it 1:03:39.200 --> 1:03:40.080 like working with Mark? 1:03:41.600 --> 1:03:45.640 You know, I've had the privilege of working with and 1:03:45.760 --> 1:03:49.720 learning from Mark for fifteen years here, obviously as CEO, 1:03:50.080 --> 1:03:53.320 you know, and as a product visionary. He really shepherds 1:03:53.400 --> 1:03:57.160 the product roadmap and has defined the long term vision 1:03:57.280 --> 1:03:59.080 for a lot of the things that we're investing in 1:03:59.760 --> 1:04:03.200 with incredibly ambitious goals, and I think that's a tremendous 1:04:03.240 --> 1:04:06.200 and powerful motivator for us, and I try to make 1:04:06.240 --> 1:04:09.400 sure that we have the financial frameworks and targets that 1:04:09.480 --> 1:04:12.439 are going to enable us to invest against those things. 1:04:12.880 --> 1:04:16.360 Innovation isn't free, and that's something that we're very mindful of, 1:04:16.560 --> 1:04:19.800 and we recognize that, especially against some of our longest 1:04:19.880 --> 1:04:22.840 time horizon ambitions, we have to earn the right to 1:04:22.920 --> 1:04:25.280 put capital towards those things in the way that we do. 1:04:26.080 --> 1:04:27.520 What I will say, having worked with. 1:04:27.560 --> 1:04:30.560 Mark for such a long time is he's tremendous at 1:04:30.600 --> 1:04:33.800 adapting to the time that we're in. And so whether 1:04:33.920 --> 1:04:37.040 that was leading a four hundred person startup when I joined, 1:04:37.200 --> 1:04:40.320 whether that was overseeing our transition to the public markets 1:04:40.800 --> 1:04:43.840 during the shift to mobile, or whether that was this 1:04:44.200 --> 1:04:47.880 past year, helping us really retool our cost structure and 1:04:47.960 --> 1:04:50.720 the way we operate, and leading on the Year of Efficiency. 1:04:51.200 --> 1:04:54.200 I think Mark is tremendously good at making hard decisions, 1:04:54.680 --> 1:04:57.160 at acting on them with conviction and looking forward. 1:04:58.200 --> 1:05:01.120 Mesa Chief financial Officer, Thank you so much. 1:05:04.560 --> 1:05:07.640 Thanks for listening to the Bloomberg Markets podcast. You can 1:05:07.680 --> 1:05:11.720 subscribe and listen to interviews on Apple Podcasts or whatever. 1:05:11.560 --> 1:05:13.000 Podcast platform you prefer. 1:05:13.400 --> 1:05:16.680 I'm Matt Miller. I'm on Twitter at Matt Miller nineteen 1:05:16.760 --> 1:05:17.360 seventy three. 1:05:17.840 --> 1:05:20.200 And I'm Faul Sweeney. I'm on Twitter at pt Sweeney. 1:05:20.320 --> 1:05:23.000 Before the podcast, you can always catch us worldwide at 1:05:23.000 --> 1:05:23.760 Bloomberg Radio.